Philippines: The San Roque Hydro Project

Prepared by International Rivers Network, May 2002

Project Description: The San Roque Dam is located on the lower Agno River of Pangasinan Province, in the Cordillera region of Luzon island in the Philippines. If completed, the 200 meter-high San Roque would be the largest private hydropower project in Asia. Electricity generated by the dam will be primarily used to power industrial activity and the burgeoning mining industry in northern Luzon. Preparation of the site began in 1998, and construction is slated for completion in 2003. San Roque is the third dam to be constructed on the Agno river: the first two, Binga and Ambuklao, were built in the 1950s.

Corporate Actors: The San Roque Power Corporation (SRPC) is owned by a Japanese trading company, Marubeni (41%); a subsidiary of US energy company Sithe Energies Inc. (51%), which is 29% owned by Marubeni; and a Japanese utility company, Kansai Electric (7.5%). In 1997, the Philippines National Power Corporation (NPC) gave the SRPC the rights to build, operate and maintain the project for a period of 25 years. In April 1998, US-based Raytheon company won a $700 million sub-contract to design and build the facility.

Financing: The project cost is estimated at US $1.19 billion. In October 1998, the Japan Bank for International Cooperation (JBIC) approved a $302 million loan to the private sector developers, and lent an additional $400 million to the National Power Corporation in September 1999. However, due to public pressure in Japan and evidence that it may have breached its own guidelines, JBIC has not yet disbursed all of its loans for the project. Other financing has come from a consortium of Japanese commercial banks and equity provided by the project sponsors.

Claimed benefits:Project benefits are said to include irrigation of 87,000 hectares, water quality improvements due to reduced downstream siltation, and 50 percent reduction of floods which destroy crops during the rainy season. However, the two upstream dams, Binga and Ambuklao, have been plagued by excessive sedimentation due to logging and gold mining operations in the Agno watershed, resulting in more severe floods at the upper end of the reservoirs. There is no reason to believe that the situation will be any different at San Roque.

Economic impacts:The cost of power from San Roque is hugely inflated, and the San Roque Power Corporation (SRPC) stands to gain massive profits from the project, whether or not it successfully produces power. The National Power Corporation (NPC) has agreed to pay the SRPC between 13 to 21 pesos (US$0.32 to 0.51) per kilowatt hour of electricity purchased. NPC has also agreed to pay over $400 million pesos ($10 million) per month to the SRPC regardless of whether there is sufficient water available to generate power. The Power Purchase Agreement forces NPC to buy San Roque power even if it doesn't need it.

Displacement , Resettlement and Opposition: Already, more than 600 families have been evicted to make way for the dam. Many are struggling to survive in cramped quarters in a resettlement site, without any land to sustain them. The lives of another 200 famlies are being disrupted by excavation for the dam. They, too, will be forced from their lands.

The project is fiercely opposed by thousands of indigenous Ibaloi peoples upstream of the dam site. The Cordillera Peoples Alliance estimates that if the dam is built, more than 2,000 Ibaloi families in Itogon, Benguet will be adversely affected by the project. Many of the people facing resettlement were forced to move once before to make way for the Binga and Ambuklao dams upstream. The livelihoods of tens of thousands of downstream residents will be affected due to erosion and destruction of fisheries.

JBIC's environmental guidelines state that people resettled by projects it funds must have given their consent. Given the strident opposition of the populations slated for resettlement, it appears that JBIC's support for this project violates its own guidelines.